Another IHT query
Discussion
The wife of a relative of mine passed away a couple of years ago. He owns a property worth approximately £450k, this has always been in his name rather than joint names. Am I correct in thinking that
1. Because the property was in his name only he can't utilise his wife's Residence Nil Rate Band allowance?
2. As long as his TOTAL assets are below £500k he shouldn't have any IHT to pay?
Thanks for all advice.
1. Because the property was in his name only he can't utilise his wife's Residence Nil Rate Band allowance?
2. As long as his TOTAL assets are below £500k he shouldn't have any IHT to pay?
Thanks for all advice.
Countdown said:
The wife of a relative of mine passed away a couple of years ago. He owns a property worth approximately £450k, this has always been in his name rather than joint names. Am I correct in thinking that
1. Because the property was in his name only he can't utilise his wife's Residence Nil Rate Band allowance?
2. As long as his TOTAL assets are below £500k he shouldn't have any IHT to pay?
Thanks for all advice.
Iirc he can still utilise the unused portion of his wife's NRB although if his total assets are less than £500k anyway then no IHT would be due in any case -£325k allowance plus the £175k house NRB.1. Because the property was in his name only he can't utilise his wife's Residence Nil Rate Band allowance?
2. As long as his TOTAL assets are below £500k he shouldn't have any IHT to pay?
Thanks for all advice.
Fwiw I have nearly finished dealing with a relatives probate and managed to get her husbands "unused " allowances ( not all ) and with help from my solicitor, from his death over 45 years ago !
alscar said:
Iirc he can still utilise the unused portion of his wife's NRB although if his total assets are less than £500k anyway then no IHT would be due in any case -£325k allowance plus the £175k house NRB.
Fwiw I have nearly finished dealing with a relatives probate and managed to get her husbands "unused " allowances ( not all ) and with help from my solicitor, from his death over 45 years ago !
Thanks Alscar - if he's allowed to utilise the property NRB I assume he's also allowed to use the £325k for other assets?Fwiw I have nearly finished dealing with a relatives probate and managed to get her husbands "unused " allowances ( not all ) and with help from my solicitor, from his death over 45 years ago !
Countdown said:
Thanks Alscar - if he's allowed to utilise the property NRB I assume he's also allowed to use the £325k for other assets?
Yup - everyone gets the £325k and then the £175k is only iro the house.The one nuance to this is that if the house is not left to a direct relation ( wife ,child etc ) then the NRB allowance is not allowed.
Also and not applicable here also if the entire estate is over £2m then a portion of the NRB is then tapered away on a matrix basis until zero remains of it ie at £2.35m.
Sobering thought that on £ 500k if "only" £ 325k was allowable the IHT bill at 40% is £ 70k !
alscar said:
Yup - everyone gets the £325k and then the £175k is only iro the house.
The one nuance to this is that if the house is not left to a direct relation ( wife ,child etc ) then the NRB allowance is not allowed.
Also and not applicable here also if the entire estate is over £2m then a portion of the NRB is then tapered away on a matrix basis until zero remains of it ie at £2.35m.
Sobering thought that on £ 500k if "only" £ 325k was allowable the IHT bill at 40% is £ 70k !
Thanks again - that will be a relief to his two sons The one nuance to this is that if the house is not left to a direct relation ( wife ,child etc ) then the NRB allowance is not allowed.
Also and not applicable here also if the entire estate is over £2m then a portion of the NRB is then tapered away on a matrix basis until zero remains of it ie at £2.35m.
Sobering thought that on £ 500k if "only" £ 325k was allowable the IHT bill at 40% is £ 70k !
If my memory is correct..
If the house is valued below the joint £350k allowance then I don't think that any unused allowance can be moved over to boost the personal allowance.
So if a house is worth around £250k, you loose the unused £100k. You can't add it to the £650k joint personal allowance.
So when folk say that a married couple wont pay IHT unless their estate is above £1m, they aren't necessarily correct.
If the house is valued below the joint £350k allowance then I don't think that any unused allowance can be moved over to boost the personal allowance.
So if a house is worth around £250k, you loose the unused £100k. You can't add it to the £650k joint personal allowance.
So when folk say that a married couple wont pay IHT unless their estate is above £1m, they aren't necessarily correct.
The Gauge said:
If my memory is correct..
If the house is valued below the joint £350k allowance then I don't think that any unused allowance can be moved over to boost the personal allowance.
So if a house is worth around £250k, you loose the unused £100k. You can't add it to the £650k joint personal allowance.
So when folk say that a married couple wont pay IHT unless their estate is above £1m, they aren't necessarily correct.
In Countdowns example it makes no difference but I agree with your last line. If the house is valued below the joint £350k allowance then I don't think that any unused allowance can be moved over to boost the personal allowance.
So if a house is worth around £250k, you loose the unused £100k. You can't add it to the £650k joint personal allowance.
So when folk say that a married couple wont pay IHT unless their estate is above £1m, they aren't necessarily correct.
The NRB is up to £175k so if the jointly owned house was worth that £250k , £175k would be passable on effectively first death and then only £75k eligible.
Not sure quite how this works though if there is a big difference between first and second deaths in value terms - I guess slightly more than £250k ?
In theory all things being equal max IHT allowance therefore £ 900,000.
I think.
I don't think I disagree with any of the above but just to make sure I understand
Wife passed away 12 months ago, no will and (for the purposes of this discussion) no assets in her own name
Husband owns a house worth somewhere between £400k and £500k
Husband owns commercial property worth £350k
My understanding is using the above fictional figures
1. he can leave the full value of the house to his kids using a combination of the £350k RNRB plus £150k out of the £650k combined allowance for other assets
2. That leaves £500k of "Other assets allowance" so he can also leave his £350k to his kids/grandkids/18yo girlfriend
Does that sound correct?
Wife passed away 12 months ago, no will and (for the purposes of this discussion) no assets in her own name
Husband owns a house worth somewhere between £400k and £500k
Husband owns commercial property worth £350k
My understanding is using the above fictional figures
1. he can leave the full value of the house to his kids using a combination of the £350k RNRB plus £150k out of the £650k combined allowance for other assets
2. That leaves £500k of "Other assets allowance" so he can also leave his £350k to his kids/grandkids/18yo girlfriend
Does that sound correct?
Countdown said:
1. he can leave the full value of the house to his kids using a combination of the £350k RNRB plus £150k out of the £650k combined allowance for other assets
I don't think that last bit is correct. Once the house allowance is used up, then no other allowance can be applied to any remaining value of the house. The £650k 'other assets' is for exactly that - assets other than the house.Hopefully I am wrong, but I don't think I am
The Gauge said:
Countdown said:
1. he can leave the full value of the house to his kids using a combination of the £350k RNRB plus £150k out of the £650k combined allowance for other assets
I don't think that last bit is correct. Once the house allowance is used up, then no other allowance can be applied to any remaining value of the house. The £650k 'other assets' is for exactly that - assets other than the house.Hopefully I am wrong, but I don't think I am
I'll add my experience having just put my dads estate through probate (grant issued today!).
I decided to go DIY with probate because a rogue solicitor took advantage of us when my uncle died. Dad's estate seemed straightforward and the probate forms fairly easy to navigate. And mostly it's been fine. The value of his estate was over 325k but under 500k and he has left his small flat to me and my brother. I could have claimed mum's unused NRB as she passed 11 years ago but because the value was under 500k I chose not to in order to keep things simple. In hindsight I should've claimed it as it appears to be nothing more than a tick box on the form. Anyway, here's what went slightly wrong...
I ran the estate through the HMRC calculator and it came back as no IHT due as expected. So I submitted the probate form. But the process was delayed when the probate service said I needed to fill on IHT400. This was because it was over 325k and in order to claim RNRB it appears you need to fill in the long form. All worked out fine in the end and probably delayed it by no more than a month. But it sounds like OP is in a similar situation. When applying for probate DO claim deceased spouse unused NRB as this gives you 650k allowance which covers everything. If not, you will need to submit IHT400.
What I have learned is that solicitors take the pxxx. They will take thousands for doing very little and if the estate is simple, as in a property and a bit of cash, then you can absolutely do probate without using them.
I decided to go DIY with probate because a rogue solicitor took advantage of us when my uncle died. Dad's estate seemed straightforward and the probate forms fairly easy to navigate. And mostly it's been fine. The value of his estate was over 325k but under 500k and he has left his small flat to me and my brother. I could have claimed mum's unused NRB as she passed 11 years ago but because the value was under 500k I chose not to in order to keep things simple. In hindsight I should've claimed it as it appears to be nothing more than a tick box on the form. Anyway, here's what went slightly wrong...
I ran the estate through the HMRC calculator and it came back as no IHT due as expected. So I submitted the probate form. But the process was delayed when the probate service said I needed to fill on IHT400. This was because it was over 325k and in order to claim RNRB it appears you need to fill in the long form. All worked out fine in the end and probably delayed it by no more than a month. But it sounds like OP is in a similar situation. When applying for probate DO claim deceased spouse unused NRB as this gives you 650k allowance which covers everything. If not, you will need to submit IHT400.
What I have learned is that solicitors take the pxxx. They will take thousands for doing very little and if the estate is simple, as in a property and a bit of cash, then you can absolutely do probate without using them.
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